LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
Two joint owners of a policy disagree, and one alone instructs the agent to change the beneficiary. The agent should explain that:
- Athe insurer will decide between the owners after reviewing each of their positions
- the change generally requires both owners to sign, as they hold the rights together
- Ceither owner may act alone, since joint ownership gives each full and independent authority
- Dthe owner who pays the premiums controls all decisions regarding the contract
Correct answer: B) the change generally requires both owners to sign, as they hold the rights together
Joint owners hold the contract rights together, so material changes require both signatures. The agent should not take sides, and a disagreement may need legal advice rather than an administrative solution.
Why the other options are wrong
- AAn insurer administers the contract rather than adjudicating between owners.
- CJoint ownership requires joint action on changes to the contract.
- DPaying premiums does not confer sole control over a jointly owned policy.
Exam tip
Joint owners act together; one owner alone cannot change the contract.
Common mistake
Accepting one joint owner's instruction because the other is unavailable.
What this tests
CISRO competency component 1.2 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.